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CALIFORNIA & INVESTMENT ADVISORY COMMISSION

ISSUE BRIEF VS. PUBLIC-PRIVATE PARTNERSHIPS: A COMPARATIVE ANALYSIS

AUGUST 2007 ISSUE BRIEF, CDIAC #07-04 INTRODUCTION

Since the sale of the Chicago Skyway Bridge that provided the of Chicago $1.8 billion in exchange for a 99-year operating lease of the toll bridge, the discussion of the use of privatization and public-private partnerships (otherwise known as “PPPs”, “joint-ventures” or “P3s”) to solve public agency infrastructure needs has reached new levels.1 Privatization and P3s are not new concepts; rather both have been in existence for many years. In the 1980’s, British Prime Minister, , popularized privatization by divesting her government’s of the coal, steel, oil and electricity industries in Britain, which helped to invigorate the British .2 In the late 1980’s, California was on the cutting edge of P3s, with the passage of Assembly Bill 680, which authorized four pilot public-private partnerships for transportation projects, leading to the construction of SR-91, a toll-road in Orange County and SR-125, a toll road in San Diego County. Public-private partnerships, including design- build concepts, also were included in the 2007 California Five-Year Infrastructure Plan as a way to leverage limited public resources to help address the ’s growing infrastructure needs, which were valued at approximately $500 billion for the next twenty years.3  The principles behind privatization and P3s are similar— Specifically, privatization is defined as the economic  private sector involvement with the delivery of public process of transferring , such as a building, road, projects or services. While these terms are often used or enterprise system that delivers services from public interchangeably, they have distinct differences that public ownership to private ownership.5 Supporting this definition agencies should weigh when considering them. This issue is the Office of Management Budget’s (OMB) Circular brief provides basic information on privatization and P3s A-76, the policy of of commercial activities and identifies shared characteristics and key operational for federal agencies. In this document, privatization differences. This analysis is intended to assist public accounts for the process of a public agency transferring a agencies in better understanding and evaluating options to government-owned or government-operated commercial deliver public infrastructure projects and enterprise activity to private sector control and ownership. related services. With privatization, according to the OMB policy, there is no government ownership and control and there is no service contract or fee-for-service agreement between the WHAT IS PRIVATIZATION? agency and the private sector after a commercial activity or enterprise has been privatized.6 Further supporting this The basic goal of privatization is the introduction and definition, the California’s Legislative Analyst’s Office has use of -based competition by government for the described privatization as the involvement of the private delivery of public services or goods by the private sector. sector in providing that otherwise The term “privatization” is most commonly used to refer might directly be provided by governments.7 Thus, to any shift of government activities or functions from a privatization occurs when the government sells public public agency to the private sector. It is an umbrella term assets to the private sector or when the government stops used to account for greater private sector participation in providing a service directly and relies on the private sector the delivery of public services. Privatization has also been to deliver the service. Ownership is the key distinction characterized as “sometimes leaving very little government of privatization according to this focused definition involvement, and other times creating partnerships of privatization. between government and private service providers where government is still the dominant player.” 4 Privatization has been used as a procurement and service • After privatization, there is the potential for the loss of delivery method for public agencies including but not public . While the privatization may address limited to contracting, grants, vouchers, volunteerism, the issue of public employees, there is the potential public-private partnerships, private donation, franchise, that a employee will be redirected to service shedding, , and asset sales.8 It has another public job or can become an employee of the been frequently associated with industrial or service- private sector. oriented enterprises, including power generation, health, Most public agencies already have incorporated some form sanitation, and , but it can also apply to any of privatization within their normal course of operations, publicly owned asset, such as land, roads, or even whether it is procuring office supplies from private vendors, water rights. contracting for waste management services or selling a Successfully implemented, privatization can provide many water utility system to a private water . Public public benefits including efficiency, , and high agencies, however, may still need assistance in identifying quality services, which can yield cost savings as well as potential privatization opportunities. Merrill Lynch, for  streamline government operations. A common form of example, has composed a list of characteristics to use  privatization is an asset sale where the public agency when assessing the possible use of privatization for toll 10 sells or transfers ownership of public assets to the private roads and transit projects. While the characteristics were sector, with the government having no role in the financial specifically targeted toward transportation-related projects, support, management or oversight of a sold asset. A they could potentially be used to evaluate privatization possible result of this form of privatization is that a public opportunities in other public operations. They include agency may become a regulatory body over a former assessing the following: public asset or enterprise system if new ownership results • The asset or enterprise is not a core government function. in a potential monopoly. • The public agency is in serious financial trouble Privatization Example: In 1995, the state of Virginia, sold or has an urgent need for . the $300 million loan portfolio and building facilities of the • The asset or enterprise is producing poor financial results Virginia Education Loan Authority to Sallie Mae, a private under the current ownership structure. loan servicing firm. The state realized $59.3 million from the sale and was able to eliminate a program that was • The asset or enterprise has an established operating not considered a government function.9 history of five or more years and has reasonable flexibility for revenue increases. The potential drawbacks of privatization focus on the loss Privatization Example: In 1998, the largest privatization of of public control once the asset or enterprise is no longer federal property in the history of the U.S. government under the auspices of the public agency: occurred when the federal government sold Elk Hills • After the sale of a public asset or enterprise, the public Naval Petroleum Reserve in Kern County, California to agency no longer has responsibility for the asset or Occidental Oil & Gas for $3.65 billion. As the oil supply enterprise; ownership and control is now shifted to the source for the U.S. Navy, Elk Hills was once considered private sector purchaser. By giving up ownership, the an essential government asset, but with the availability of public agency will no longer have control over the fee refined petroleum products and nuclear energy meeting structure or rate setting process associated with the the military’s fuel needs, Elk Hills was no longer needed. privatized asset or enterprise. With the divestment, the federal government was out of the oil and gas producing .11 While the above example is not a transportation-related project, it does meet two of the characteristics described by Merrill Lynch; Elk Hills was no longer considered a core federal government function and it had an established operating history of oil production.

WHAT ARE P3s? By definition a partnership, involves two or more parties committed to a common goal, sharing risk and yielding a reward to all the partners. This is a defining characteristic of P3s. A P3 is a project in which there is cooperation between the public and private sectors in one or  more areas of the design, development, construction, operation, ownership or financing of infrastructure assets, or in the provision of services.12 Compared to traditional procurement methods, the private sector assumes a greater role in the planning, financing, design, construction, operation and maintenance of public facilities or service delivery.13 Ideally, a P3 is based on the strengths of both the public agency and the private partner, which are directed toward the achievement of goals that optimize public needs, funds and services.

The contractual agreements creating the P3 between a public agency and private partner should outline the roles, responsibilities and expectations of each partner, thereby providing incentives for delivering projects on time and on budget.14 Under this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use by the general public.15 Traditionally P3s typically involve some combination of design, build, finance, operate or transfer of an asset between the public and private sectors. The project delivery model varies, as each public agency will have its own specific need for considering a P3, ranging from contracting for operations and maintenance of a public facility to the design, construction, financing and operation of a public facility. Successfully implemented, P3s define the scope of • P3s may result in the transfer of public sector employees business; specify priorities, targets, and outputs; and set to the private sector. This may or may not result in actual the performance expectations of the partnership resulting job loss, depending on the terms of the agreement. in tangible benefits to the public agency, including: While the public sector has the potential to realize • Public agencies can use P3s to optimize public benefits cost savings, utilize expertise, achieve efficiencies in derived from cost savings, administrative expedience, construction and operation, access private capital, and management efficiency. P3s may encourage a focus and improve the quality of services with a P3, there are on for over the lifetime of the asset and, numerous factors for a public agency to consider in under the right circumstances, can be well suited for determining whether such a partnership may be viable. As many large infrastructure projects, enabling the partners an example, the Water Partnership Council has composed to spread the cost of the investment over the term of a checklist to help public water agencies determine if a P3 18 the partnership.16 is appropriate for their operational or capital needs. The questions cover rate issues including capital budgetary • Public agencies can optimize a private partner’s opera- 10 issues, regulatory compliance concerns, staffing, and 11 tional and management expertise and efficiency to operational and system deficiencies. improve service quality as well as realize cost savings. Among the infrastructure sectors in the United States • Public agencies can reduce their role from engaging where P3s have been applied are transportation, water, in day-to-day operations to contract management, wastewater, schools, prisons and defense. Since each which enables limited public personnel to fulfill other sector is different, P3 policies, approaches and political responsibilities. strategies must be tailored to the unique circumstances of As with any project financing or procurement method, each sector and project. there are also some potential issues of concern related to P3s that public agencies should consider when P3 Example: In response to changing water , contemplating such agreements, including: Seattle Public Utilities (SPU) had to address their water filtration methods. The result was a P3 with CH2M HILL • Regardless of the division of public-private to construct a state-of-the-art water treatment facility. The responsibilities, the public agency will be held P3 consisted of a design-build-operation (DBO) contract accountable by the public. between SPU and its private partner. The private partner • P3s are complex transactions that require more prepara- was responsible for the design, permits, material and tion, planning, oversight and coordination than traditional equipment procurement, construction, onsite inspection, forms of procurement, which may equate to additional start-up, and operations (for up to 25 years) of the costs. In a typical transaction, an agency would need facility. In addition to the timely delivery of the $200 to assemble a team consisting of financial advisors, million new facility, SPU calculated that use of the DBO 17 consultants, and legal counsel that specialize in P3s. saved the utility $50 million when compared to the cost In addition; public agencies should plan for long-term of using the conventional design-bid-build process.19 contract management and oversight of the P3 for the duration of the term of the partnership. WHAT ARE THE DIFFERENCES In a P3, the public agency retains ownership of the asset or enterprise, oversight of the operations and manage- BETWEEN PRIVATIZATION ment of the asset, and controls the amount of private involvement. Through a P3, the public sector sets the AND P3s? parameters and expectations for the partnership and the Privatization and P3s are similar concepts, both rooted private sector uses access to capital markets to address in the philosophy that private sector involvement in the public agency’s needs. If the P3 does not live up to the the delivery of public projects or services can result in contractual expectations of the partnership, the operational and fiscal benefits for a public agency. While public agency can regain complete control of the asset these terms often are used broadly and interchangeably, or enterprise system. there are key differences between them. These differences P3 Example: In 2002 the City of Indianapolis acquired occur in three primary areas: ownership, structure, and the assets of the Indianapolis Water Company from risk. Ownership refers to the party that has and controls NiSource, a privately owned water company. Once 12 the rights or interests in an asset or service enterprise. 13 Structure refers to the resulting contractual arrangements publicly owned, the city contracted with Veolia Water that are used to facilitate privatization or P3s. Risk refers to North America, for the management of all operations, the responsibilities, financial or legal, that are undertaken maintenance and customer service facets of the water- by the appropriate party–public, private or shared as works system. The 20-year P3 contract is based on conditions of a contract. The details and examples of performance incentives and contains over 40 perfor- these differences are discussed below. mance criteria in customer service, water quality, capital improvements, operations and maintenance practices, OWNERSHIP and community involvement. The partnership also A primary distinction between privatization and P3s is addresses over $400 million in capital improvement ownership of the asset (existing or new) or enterprise projects. The City maintains local control of the water system that is the subject of the transaction. When a system, while utilizing the private sector expertise for publicly owned asset or enterprise system is privatized, achieving rate stability, water-quality improvements, ownership and responsibility for the asset or enterprise and capital improvements.21 are fully transferred or sold to the private sector. STRUCTURE Ownership Example: The Department of Defense’s (DoD) Another difference between privatization and P3s is the Military Utilities Privatization Initiative (MUPI), directed structure of the contract that formalizes the involvement the privatization of all military installation utility systems, of the public and private partner after privatization or unless uneconomical or exempt for security reasons, the creation of a P3. With privatization, once an asset by 2003. This act of privatization involved the transfer or enterprise is sold, the public agency’s involvement is of ownership of the physical system; it did limited to non-existent except possibly in a regulatory not include the supply of electric power, natural gas or role. In a P3, there is flexibility with the structure of the water.19 The government would be charged user fees by agreement, allowing the public and private partners to the new service provider. Privatization enabled the DoD determine the level of participation of both partners to to meet its objective of removing itself from the business specifically address the needs of the public agency, of owning, managing and operating utility systems, while maintaining public agency ownership. thus allowing the military to focus on its core mission of national defense.20 While there are many methods for a public agency to transfer ownership of public assets or services to the private sector, the results are the same: public ownership is transferred to the private sector and the public sector is no longer involved in owning or managing the public asset or providing the once-. The following privatization models, as defined by the U.S. General Accounting Office and the reflect additional methods that a public agency can transfer own- ership of public assets or services to the private sector:

• Divestiture The public agency sells government- owned assets or commercial-type functions or enter- prises. After divestiture, the public agency will generally 14 have no role in the financial support, management, , or oversight of the divested activity.22

Example: In 1993, as a result of the Energy Policy Act of 1992, the federal government created the (http://www.usec.com) United States Enrichment (USEC) as a Government corporation, to initiate the transfer of the federal government’s uranium enrichment operation to the private sector. USEC completed privatization on July 28, 1998 through an initial public offering of stock and USEC officially changed its name to USEC Inc.23 Included in the sale was the U.S. Department of Energy uranium enrichment enterprise and the Paducah and Portsmouth Gaseous Diffusion Plant (GDP) sites. The U.S. government received about 1.8 billion dollars from the divestment of USEC.24

• Self-Help (also known as “transfer to non- organization”) The public agency enables a community group or neighborhood organization to take over providing a public service or asset such as a local park which results in a cost savings for the public agency, as well as eliminates non-core government functions.25

Example: Public agencies turn non-core government services, such as zoos, museums, fairs, parks and some recreational programs to community groups of neighborhood organizations. • Vouchers Vouchers are public agency financial • Design-Build (DB) A public agency contracts with a subsidies given to individuals for the purchase of specific private partner to provide both design and construction goods or services from the private or public sector. of a public project. Redeemable certificates are issued by the public agency Example: Utah’s Department of Transportation used for the purchase of services in the open market. Under design-build procurement for the Interstate 15 recon- this approach, the public agency relies on market struction to minimize the period of traffic congestion competition for cost control and on the individual to seek out quality goods or services. The public agency’s resulting from project construction and to complete the financial obligation is limited to the amount of the project before the 2002 Olympic Games in 30 voucher.26 Salt Lake City.

Example: In 1990, the Milwaukee Parental Choice • Design-Build-Operate (DBO) A public agency awards Program, the nation’s first publicly funded voucher a single contract for the design, construction and program, was created in Milwaukee, Wisconsin. Under operation of a public facility. 16 17 this voucher program, state funds are used to pay Example: Tampa Bay Water (TBW), Florida’s largest for the cost of students from low-income families that public wholesale water supplier, selected Veolia Water reside within the City of Milwaukee to attend private North America to build a new surface water treatment schools located in the city at no charge so long as plant, using the DBO option, enabling TBW to sign a program criteria are met. A goal of this voucher system single contract with one private-sector partner that is to localize accountability as opposed to relying on would be responsible for the design, construction and 27 government standards. operation of the facility under a long-term agreement.31

Each P3s is unique; therefore, there is no “cookie-cutter” • Lease Purchase A lease purchase is an installment- approach to assembling a P3. The following P3 models, purchase contract, under which the private partner as defined by the National Council for Public-Private finances and builds a new facility, which is then leased to Partnerships, highlight the possibilities and scope of a public agency. The public agency accrues ownership private involvement where the public agency retains to the facility over time. At the end of the lease term, the ownership of the public facility or system:28 public agency owns the facility or purchases it at the cost of any remaining unpaid balance in the lease. • Contract Services—Operations and Maintenance (and Management) A public agency contracts with a Example: The Natomas Unified School District in private partner to provide and/or maintain a specific Sacra-mento, California employed a P3 to address service. Management of the system can also be included overcrowding in its high school facilities. Using a lease- in the contract. leaseback model, the district leased part of its land to a Example: Since 1972, the City of Burlingame, California private developer that financed and built a new school has contracted with Veolia Water North America on the land. The school district makes lease payments to (formerly USFilter Operating Services,Inc. and then the developer until the end of the lease period, at which Envirotech Operating Services, Inc.) to operate, time ownership of the school will be transferred to the 32 maintain, and manage the city’s wastewater treatment school district. facility.29 • Turnkey A public agency contracts with a private nature that can be appraised and controlled, leaving the partner to design and build a complete facility in residual risks to the public agency. As an example, the accordance with specified performance standards Water Partnership Council developed a list of typical risk and criteria for a fixed price, where the private partner elements for water projects, which are generally described commits to absorb the construction risk and cost of below.34 meeting the agreed upon price. Examples of risk typically assumed by the private partner Example: In 2005, the Fairfax County Public Schools include: used the turnkey approach to develop, design, finance, and construct South County High School, a state-of-the- • The risk that the design and existing condition of the art 386,000 square-foot educational facility in Lorton, asset or enterprise are adequate for meeting contractual Virginia.33 obligations. • The risk of operating and maintaining the asset or RISK facility within its design capacity and capability as well Accompanying the asset or enterprise system that is the 18 as in accordance with established performance criteria 19 subject of privatization or a P3 is the risk associated with for service quality, safety, employee and community the ownership, operation and maintenance of the asset or satisfaction, and community relations. enterprise for either the remaining useful life (of the asset or system) or the contract term. • Preventive maintenance risks (and any associated costs) over the contract term. The private partner is expected Risk is not limited to just liability but includes the to return the asset, at the end of the contract, in good assumption of responsibility for uncertainties conceptual, operating condition except for normal wear and tear. operational and financial that could threaten the goals of • The financial risk for exceeding the contractual budget. privatization or a P3, including design and construction Except for adjustments for , system inputs and costs, regulatory compliance environmental clearance, other variables specified in the contract, a private partner performance, and customer satisfaction. An infrastructure assumes the risk that project costs may exceed the project owned and operated by a public agency subjects proposed budget. the agency to 100 percent of the risks associated with the facility. When an asset or enterprise is privatized, the • The risk for conducting operations in compliance with private owner assumes all risk associated with the asset applicable and regulations. The private partner or enterprise. With a P3, which has public ownership and also assumes responsibility for any fines or penalties private operation, many (but not all) of these risks can be imposed for non-compliance, provided that the violation transferred to the private partner. Risk is typically shared is attributable to negligence by the private partner. based on the principle that risk should be assigned to Examples of risk typically assumed by the public agency: the partner that is better equipped to manage or prevent that risk from occurring or that is in a better position to • Risks/responsibilities for any change orders it requires recover the costs associated with the risk. Typically in of the private partner. Due to unforeseen changes in the development of capital improvement projects, the regulatory requirements or community concerns, the private partner may prefer to assume risk of a commercial public partner may want to amend the contract after it has been finalized to address these issues. The public agency generally would be responsible for any increases in cost associated with implementing the amendment. • Risks/responsibilities for any variation in inputs to the system (e.g., for water and wastewater projects, the quantity and quality of water or wastewater that enters a treatment plant operated by a private partner). Other risks typically shared between public agency and private partner:

• Shared risk associated with planned system repairs and replacement by having the public partner assume responsibility for financing major capital projects because SUMMARY OF DIFFERENCES BETWEEN of its access to low-cost (-exempt) financing, while PRIVATIZATION AND P3s the private partner assumes responsibility for the performance and reliability of capital projects while under PRIVATIZATION P3 its control and management. 20 21 • Shared risk associated with catastrophic events such as Definition Any process aimed A contractual at shifting functions agreement between loss of power, floods, storm damage, and earthquakes. and responsibilities, the public and While this risk is not under the control of either partner, in whole or in private sectors these events are usually covered by the contract’s force part, from the for the financing, majeure clause that can excuse a private partner from government to developing, responsibility so long as the failure to perform is not the private sector, operation or attributed to its lack of due diligence. almost always managing of a involving the public facility or • Shared responsibility in proportion to their respective irrevocable transfer service. negligence or fault for a loss resulting from the other of public sector partner’s actions or omissions. assets. Because P3 contracting arrangements vary based on the amount of risk shared between the partners, the above are only an example of possible risk allocations. Ownership Private Public

Each project is unique and will have its own allocation of Contract Structure Contract methods Contract methods risk factors agreed upon by the partners. that result in private that result in varying ownership. levels of private participation. SUMMARY OF DIFFERENCES BETWEEN PRIVATIZATION Risk Private sector has Shared sole responsibility in responsibility AND P3s general.* between partners. The following chart summarizes the differences discussed earlier between privatization and P3s after the transaction occurs between the public and private partner. * Except as retained in a regulatory role. CONCLUSION 23

The high level of interest in utilizing privatization and P3s for the delivery of public services and projects can be attributed to recent high profile concession deals involving the City of Chicago and the State of Indiana. As a result, privatization and P3s have been increasingly promoted as possible financing tools for the delivery of public services and projects. Because of the potential long-term impacts of these agreements, it is important for public agencies to have a basic understanding about the differences between privatization and P3s and the corresponding positives and negatives of each procurement method. The examples provided above demonstrate that privatization and P3s are not limited and can be applied to many areas including education, defense, water/wastewater treatment, and transportation.

There are advantages and disadvantages to using both procurement methods to address infrastructure needs or improve public agency efficiency in the delivery of public services and projects. Local agencies should carefully consider these factors in light of their particular project needs and resources.

While neither privatization nor P3s is likely to fully replace conventional financing, when used judiciously, they can be a useful financing option for public agencies to consider. 8� United States General Accounting Office, Privatization: Lessons Acknowledgements Learned by State and Local Governments GAO/GGD-97-48, (Washington, D.C., 1997) p. 22. Angelica Hernandez, Research Program Specialist, researched and authored this Issue Brief. 9� Associated Press, “To Cut Costs, State Sells Off Student Loans to Sallie Mae,” The Virginian-Pilot, December 3, 1995, final ed.: B8. www. John Decker, Executive Director and Kristin Szakaly-Moore, scholar.lib.vt.edu/VA-news/VA-Pilot/issues/1995/vp951203/12030082. htm (June 6, 2007). Director of Policy Research, reviewed and edited this Issue Brief. 10� Merrill Lynch, US Toll Road Privatization: Uncovering Investment Opportunities in the Tax-exempt Market, (New York: Merrill Lynch) p. 3. On-line resources 11� U.S. Department of Energy, “Largest Federal Divestiture Completed, Elk Hills Transferred to Private Owner,” February 5, 1998, www.fe.doe/ National Council for Public-Private Partnerships gov/news/techlines/1998/tl_elsold.html (June 6, 2007). www.ncppp.org 12� Mary Rose Brusewitz, “Public-Private Partnerships in the United States.” Project Finance Legal Advisers Review 2004-2005 December Privatizatization.org (a program of the Reason Foundation) 2004/January 2005: 70-71. www.privatization.org 24 13� Deloitte, A Deloitte Research Study, Closing America’s Infrastructure 25 Federal Highway Administration Gap: The Role of the Public-Private Partnership (2007) p. 8. www. deloitte.com/dtt/cda/doc/content/us_ps_PPPUS_final(1).pdf www.fhwa.dot.gov/ppp/ 1� Deloitte, p. 16. U.S. Environmental Protection Agency www.osti.gov/privatization/report 1� The National Council for Public-Private Partnerships, “How Partnerships Work,” www.ncppp.org/howpart/index.shtml www.eren.doe.gov/brightfields (April 27, 2007).

Water Partnership Council 16� Deloitte, p. 16. www.waterpartnership.org 17� Canada. Yukon . Overview of Public-Private Partnerships (Yukon) p. 7.

18� The Water Partnership Council in Establishing Public-Private References and End Notes Partnerships for Water and Wastewater Systems, A Blueprint for Success. (Washington D.C., 2003) p. 44. 1� Public agency is any federal, state, or local government agency, authority or special district. 19� The National Council for Public-Private Partnerships, “CH2M Hill OMI Seattle Cedar Water Treatment Facility,” http://www.ncppp.org/cases/ 2� Reason Foundation, Transforming Government Through Privatization, cedarwater.shtml (June 7, 2007). Annual Privatization Report 2006 (Los Angeles, 2006) p. 4. www.reason.org. 20� Jeffrey A. Renshaw. “Utility Privatization in the Military Services: Issues, Problems, and Potential Solutions.” Air Force Review. 3� State of California, Department of Finance, California Five Year Spring 2002 p.3. www.findarticles.com./p/articles/mi_m6007/is_2002_ Infrastructure Plan 2007, (Sacramento, 2007) p. i. www.dof.ca.gov/ Spring/ai_103223910/print. (June 7, 2007). HTML/CAPOUTLY/Inf_Report_07_w.pdf (June 5, 2007). 21� Renshaw p. 2. � Privatization.org, “What is Privatization,” www.privatization.org/ database/whatisprivatization.html (June 6, 2007). 22� The National Council for Public-Private Partnerships, “City of Indianapolis, IN, Water Services Partnership,” www.ncppp.org/cases/ � “Privatization,” Encyclopedia Britannica. 2007. Encyclopedia indianapolis.shtml (June 7, 2007). Britannica Online. (June 6, 2007). 23� United States General Accounting Office, Terms Related to 6� Executive Office of the President, Office of Management and Budget, Privatization Activities and Processes GAO/GGD 97-121, (Washington Circular A-76 (Revised), (Washington D.C., 2003) p. D-8. D.C., 1997) p. 4.

7� California Legislative Analyst Office, “LAO Analysis of the 1996-97 2� U.S. Department of Energy, “Nuclear Fuel Supply Security, Budget bill, P&I Part V-6 Privatization in California State Government,” Enrichment Activities,” www.nuclear.energy.gov/nuclearFuelSecurity/ 1996-97 Budget Perspectives and Issues: Major Issues Facing the neNFSEnrichmentActivities.html (June 7, 2007). Legislature (Sacramento, 1996) Introduction. www.lao.ca.gov/analysis_ 1996/p965-6.html. 2� “USEC Portsmouth Gaseous Diffusion Plant “Cold Standby” Plan,” (B-286661) Letter to Senator Domenici from Anthony H. Gamboa, Acting General Counsel, United States General Accounting Office, January 19, 2001.

26� Privatization.org, A Program of the Reason Foundation, “Types and Techniques of Privatization,” www.privatization.org/database/ whatisprivatization/privatization_techniques.html (June 7, 2007).

27� United States General Accounting Office, GAO/GGD 97-121, p 11.

28� Russ Kava, Wisconsin Legislative Fiscal Bureau, Milwaukee Parental Choice Program. (Madison, WI, 2007) pp. 1-7. www.legis.state.wi.us/ lfb/informationalpapers/29.pdf (June 7, 2007).

29� The National Council for Public-Private Partnerships, “Types of Public- Private Partnerships,” www.ncppp.org/howpart/ppptypes.shtml (June 7, 2007).

30� The National Council for Public-Private Partnerships, “City of 26 Burlingame Wastewater Treatment Facility,” www.ncppp.org/cases/ burlingame.shtml (June 7, 2007). © All Rights Reserved.

31� U.S. Department of Transportation, Federal Highway Administration, Permission is granted to use this document with written credit given to “I-15 Corridor Reconstruction Project,” www.fhwa.dot.gov/ppp/ California Debt & Investment Advisory Commission (CDIAC). i_15.htm (June 7, 2007).

32� The National Council for Public-Private Partnerships, “Veolia Water and Tampa Bay Water, Fl. Water Treatment Partnership,” www.ncppp. org/cases/tampabay.shtml (June 7, 2007).

33� Deloitte, p. 27.

3� Clark Construction, “Representative Projects, South County High School,” www.clarkconstruction.com/portfolio/ViewProject.asp?Proje ctID=1364&Category=28&CategoryName=Educational (June 7, 2007).

3� The Water Partnership Council in Establishing Public-Private Partnerships for Water and Wastewater Systems, p. 72. This endnote is the source for the bulleted risk elements listed in the “Risk” section. CALIFORNIA DEBT & INVESTMENT ADVISORY COMMISSION

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